Practical Guide to Combating Money Laundering & the Financing of Terrorism

Foreword 15
1 What money laundering is
1.1 Introduction 19
1.2 Definition of money laundering 20
1.3 Crime mustn’t be allowed to pay 23
1.4 The money laundering process 25
1.5 Money laundering and black money 34
1.6 The financing of terrorism 36
1.7 International aspects of money laundering 38
1.8 Summary 41
Exercise 43
Self-test 44

2 Combating money laundering
2.1 Introduction 47
2.2 History of combating money laundering 48
2.3 The scale of money laundering 51
2.4 Factors which make a country attractive 53
2.5 The combating of money laundering: a task for you, too 54
2.6 Summary 57
Exercise 58
Self-test 58

3 The FATF
3.1 Introduction 61
3.2 The FATF 61
3.3 The periodical review of the FATF recommendations 63
3.4 Improving compliance with the FATF recommendations 65
3.5 The identification of non-cooperative countries or high risk countries 66
3.6 The following of trends and techniques in the area of money laundering
and the financing of terrorism, and publication of guidance papers 68
3.7 Summary 68
Exercise 70
Self-test 70

4 Europe and the combating of money laundering
4.1 Introduction 73
4.2 European Union 74
4.3 The European Anti-money laundering directives 76
4.4 The Regulation on information accompanying transfers of funds 84
4.5 Current events: the Fifth and Sixth Anti-money laundering directive 84
4.6 Summary 88
Exercise 90
Self-test 90

5 The combating of terrorism
5.1 Introduction 93
5.2 The United Nations 95
5.3 The FATF and combating the financing of terrorism 100
5.4 The European Union and the combating of terrorism 100
5.5 The USA Patriot Act 102
5.6 Summary 104
Exercise 106
Self-test 106

6 Why aggressive tax planning is a CDD issue
6.1 Introduction 109
6.2 A few terms 111
6.3 Anti-abuse: general 117
6.4 Anti-abuse measures: specific and general 122
6.5 Why is knowledge of this subject important? 126
6.6 Aggressive tax planning: recognise the indicators 127
6.7 Finally: some tips and recommendations 129
6.8 Summary 130
Exercise 132
Self-test 132

7 Sanctions
7.1 Introduction 135
7.2 The effect of sanctions 136
7.3 The scope of the sanction regulations 140
7.4 Obligations under the sanction regulations 140
7.5 Supervision of compliance with the sanction regulations 143
7.6 The Office of Foreign Assets Control 144
7.7 Summary 146
Exercise 148
Self-test 148

8 The anti-money laundering legislation in the Netherlands
8.1 Introduction 151
8.2 Criminalisation of money laundering 152
8.3 Criminalisation of the financing of terrorism 154
8.4 Confiscation measures 154
8.5 Sanctions 155
8.6 Customer due diligence 156
8.7 Reporting of unusual transactions 156
8.8 Retention of data 156
8.9 Training of personnel 157
8.10 Suitable procedures for internal control and communication 157
8.11 Adequate supervision and enforcement 157
8.12 International cooperation between investigative bodies, Financial Intelligence Units and supervisors 158
8.13 UBO register 159
8.14 Other rules 159
8.15 Summary 161
Exercise 162
Self-test 162

9 Money Laundering and Terrorist Financing (Prevention) Act
9.1 Introduction 165
9.2 Scope of the law 165
9.3 Principle-based and risk-based 170
9.4 Customer due diligence 172
9.5 Continuous control: monitoring and review 175
9.6 Duty to report 176
9.7 Supervision, retention of data and training 176
9.8 Summary 176
Exercise 177
Self-test 177

10 Client screening
10.1 Introduction 179
10.2 Key concepts of client screening 192
10.3 Ultimate beneficial owners 206
10.4 Establishing the purpose and the anticipated nature of the business relation 211
10.5 Source of the funds and wealth 212
10.6 Simplified customer due diligence 213
10.7 Enhanced client screening 214
10.8 Client profile 223
10.9 Acceptance 226
10.10 Recording and retention requirement 227
10.11 Monitoring and review 228
10.12 Education requirement 231
10.13 Summary 232
Exercise 235
Self-test 236

11 Reporting unusual transactions
11.1 Introduction 239
11.2 Unusual transactions 240
11.3 Indicators 241
11.4 Reporting an unusual transaction 252
11.5 Article 17 requests 260
11.6 Confidentiality 260
11.7 Liability 262
11.8 The Dutch FIU and the ‘Wwft’-supervisors 266
11.9 The latest developments 273
11.10 Summary 278
Exercise 280
Self-test 280

12 Due diligence for trade finance and correspondent banking
12.1 Introduction 283
12.2 An introduction to trade finance and correspondent banking 283
12.3 De FEC risks of trade finance products 284
12.4 The financing of terrorism 293
12.5 Due diligence measures in trade finance 294
12.6 Summary 300
Exercise 301
Self-test 301

13 The anti-money laundering legislation and the shifting effects
13.1 Introduction 303
13.2 Shifting effects 303
13.3 Importance of education 304
13.4 High risk products 305
13.5 Providing assistance due to corruption and infiltration 306
13.6 Money laundering using other methods 307
13.7 Money laundering and real estate 308
13.8 Money laundering using crypto’s 310
13.9 The band marches on 312
13.10 Old sector, new concerns 314
13.11 FATF typology reports 315
13.12 Geographic shift 316
13.13 Summary 320
Exercise 322
Self-test 322

14 Supervision and compliance
14.1 Introduction 325
14.2 Compliance and risk management 327
14.3 The development of the compliance function 329
14.4 The compliance officer 331
14.5 Customer due diligence and the compliance officer 334
14.6 Non-compliance 336
14.7 Summary 340
Exercise 341
Self-test 341

Appendix
Abbreviations 345
List of terms used 351
Knowledge bank 373
Answers to exercises and self-test 375